Do you ever get an email from a prospect who asks question after question only for them to finally decide they’re not interested? You spent hours answering their questions, got excited about the possibility of a new customer, and suddenly all communication has stopped.
You’ve been ghosted.
In an ideal world, it would be easy to identify straight off the bat the best prospects to go after. Of course, in reality things aren’t so simple. A seemingly hot prospect might come to you full of questions, only to never be heard from again. This is why it’s important to start honing the skill of determining if your hot prospect is actually a potential customer or just a tire kicker.
Identifying Your Core Customers
When I get an email from someone needing help, there are often obvious signs that indicate straight away whether the person is a serious prospect, or merely looking around. Knowing what to do will help you save time and figure out how to respond to such requests. Here are the three things you can do to identify your core customers so that you can spend time on the most serious and likely prospects.
Identify Red Flags at the Start
Red Flag #1
Sometimes it’s difficult to know right away whether someone will become a customer (and a good one at that), but there are some tell-tale signs that can serve as strong indicators.
If someone is difficult to deal with during your initial discussions most likely things won’t get better after they’ve signed on—if they decide to go with you. For example, a prospect might take up a lot of your time asking for advice with no signs of moving forward. It might feel like providing enough value to the other person will encourage them to become a customer, but this often isn’t the case. Since they’re already getting all the help they need, where is the incentive to do so? And if the prospect continually asks for more help and advice, expect to spend large chunks of time catering to their demands. Instead, try limiting the exchange to a few emails before you suggest progressing to something bigger, such as a brief phone call or a small project. Doing so forces the other person to think more seriously about whether they want to work together.
Red Flag #2
Another red flag is when someone contacts you out of the blue to give advice.
Isn’t it interesting how people love to give advice, regardless of whether or not they’re qualified to do so? If you’ve been running a business, you’re probably received advice from strangers on how to run your business, even if they don’t run one themselves!
This brings us to the question of when to take feedback seriously. It turns out that the answer depends on whether the person is already a customer or not.
In Trakio’s Beta program, the free users gave suggestions that were very different from its paid users. Paid users provided suggestions that were more mundane, but increased the value of the product. Free users, on the other hand, gave ideas that were “nice to have,” but not essential to product usage.
So while it’s (sometimes) nice to get feedback from people, it’s important to identify where the feedback is coming from, and whether its implementation increases the value of your products and business overall.
Understand the Psychology Behind Buyer and Non-buyer Behavior
If you’ve ever felt like someone wasted a chunk of your time without providing anything in return, don’t despair. We’ve all been there.
The first step to prevent this is to understand that it takes two people to cooperate: you and the other person. When I interact with someone who reaches out to me, I remind myself to keep aware of how much time I’m spending with the other person. Giving value upfront can give the prospect an idea of how you can benefit them, but be careful not to spend too much time upfront.
Related Article: Pinpoint Your Sweet Spot Customers
If you spend a lot of energy helping the person over and over, the prospect will be conditioned to expect help from you, making them feel less gratitude over time and increasing your level of resentment towards them.
The increased use of the internet for service and product transactions is likely a major reason people feel more comfortable taking without the need to reciprocate. In a study done by the University of Nottingham’s School of Economics, volunteers were more likely to cooperate with one another if they were held publicly accountable and could face punishment for acting selfishly. Since the internet is largely anonymous, for the most part people aren’t publicly accountable for their actions. The threat of punishment is low since users aren’t faced with social rejection or any other form of punishment when they don’t conform to social norms.
When speaking with prospects, the question “how much does this cost?” will invariably come up. Before you get to the price point though, you need to demonstrate how you can provide value first. This helps the prospect understand how you can help them reach their goals and make their life easier, which will essentially make the price more justifiable. Despite your best efforts, some people will solely focus on the cost and not on the value you provide. If this is the case, accept that not everyone is going to be a customer and that’s okay.
Determine the Value of Your Customers
According to the Pareto principle, about 80% of sales revenue comes from 20% of customers. We can use this principle in a few ways to determine the value of our customers.
I find using the value quadrant useful exercise to get a big picture idea of how I’m spending my time and what areas I can focus on to maximize efficiency. In a nutshell, you look at your current customers and evaluate the amount of support (i.e. time) they need and the revenue they produce.
Using a value quadrant then helps determine the placement of various customers:
Place your most valuable customers in the top left quadrant. These are the customer with high revenue and low support. Then place from there place the customers of varying levels and support in the appropriate quadrants.
Interestingly, you might notice in your own experiences that as you charge higher prices or rates, customers tend to take up less of your time and make fewer demands.
Once you’ve determined which of your current customers fit into the top left quadrant, learn more about them. This includes finding common demographic factors such as their age, occupation and geographical location. Look at where these groups congregate or go to for information — this can be as direct as providing them with survey questions.
Once you’ve learned more about how to reach your ideal customer, you can go after them in a focused and deliberate manner. You can go where they go to find similar customers and join the conversations they are already having. Finding and targeting your ideal customer is a win-win for both you and the customer. You get to work with people who appreciate your time and help, while giving them the opportunity to work with someone who can over-deliver and dedicate energy to helping them. It’s a process that you can begin today by figuring out what your customer needs and the revenue they provide.
You don’t need to overhaul your customer base overnight, but doing an initial evaluation will go a long way in finding out how to improve your products and services.
How about you? Have you found your ideal customer yet? Do you have any questions using the value quadrant? Let us know in the comments!
Author: Melissa Chu helps business owners develop good work habits and get more done in less time. You can download the free guide to achieving your work goals more efficiently, so that you can start finding your ideal target customer today.